Standard Oil Company of California v. Rogers C. B. Morton, the Secretary of the Interior of the United States

Standard Oil of California is the owner of an undivided half interest in five federal oil and gas leases issued by the Bureau of Land Management of the United States Department of the Interi- or in 1958. The issue in controversy in the present action is the interpretation to be accorded the rental provisions of these leases. The rental rate provisions in dispute are identical in each lease:

A year after the five leases were originally issued, they were pledged to an approved unit development called the Soldotna Creek Unit Area. Unit development of an oil and gas field is common practice. Its purpose is to avoid economic waste and the haphazard development of the land’s natural resources. A unit is made up of both “participating” and “nonparticipating” lands. The former areas share in the actual development activities and expenses dictated by the unit agreement, and they participate in the benefits produced. No rent is paid on participating acreage; instead the government collects payments on a royalty basis. A “nonpartieipating” area is still in the unit, but for purposes of the overall unit plan it is not developed for purposes of production. Rent is paid on nonparticipating…